Information-driven manufacturers utilise core solutions extensively

New information technologies such as cloud computing, mobility, social, Internet of Things (IoT), big data/analytics, and 3D visualisation have been getting a lot of attention in the industrial community.

The reason is that each of these technologies has the potential to disrupt and radically change the way manufacturers do business. Still, manufacturers tend to be conservative and slow to embrace new information technologies. When they do, they often demand concrete references from industry pioneers, together with hard ROI business cases, before considering any information technology investment. 

However, this go-slow strategy can be far riskier than anticipated. New information technologies may disrupt not only what happens within the four walls of a plant, but entire business processes throughout the supply chain and across the value network, and do so in fairly short order. The manufacturing environment is increasingly dynamic and volatile.

New business models such as "Industry 4.0", "Industrial Internet", "Connected Manufacturing," and "Collaborative Value Networks" are emerging.

In addition to a host of potentially disruptive technologies entering the marketplace, companies must also face rapid changes in government regulations, energy and raw materials availability, markets, and competition. By deploying leading edge information technologies, today's companies can thrive. 

New competitors in new markets, unencumbered by legacy systems, may leapfrog to the latest technologies and, based on the new capabilities provided, serve their markets in completely new ways. Existing competitors may seek to leverage technologies to attract your customers with better products and services.

Customers will soon expect products themselves to be more intelligent and accompanied by a portfolio of software and services from manufacturers. Those that choose to stay at the back of the information technology pack will find it increasingly difficult to reverse that decision.

Not only is technology changing at an ever-faster pace, but the resulting hurdles that must be jumped to catch up will become ever higher. Those with better skills in software will be better positioned to succeed.

Those who tend to run the latest software revs will be able to react more quickly when things change. What strategies can manufacturers adopt to help position them to take advantage of the latest round of technology changes?

On the whole, manufacturers have a reputation for being conservative, especially when it comes to new information technologies. Manufacturers in developed economies often have a 20th Century mindset of "run it forever," especially when it comes to the plant floor.

This mindset avoids the cost of technology additions and represented a winning strategy when things were fairly static and the environment didn't change very much or very quickly. 

In the past, this approach often paid off. With a "go-slow" approach to technology adoption, manufacturers could still obtain significant benefits, while avoiding the risk of reaching too far with technology and failing.

But in the last decade or so, that has begun to change, with leading companies adopting a "fast follower" strategy to stay abreast of technology changes and help ensure that they don't get blindsided by competitors who discover a way to use a new technology to their advantage. 

Today, changes come at an accelerating pace. Technology is not only flattening, but also shrinking the world; engendering more and better competitors, more volatility, and faster innovation. We are seeing increasing governmental regulations, unpredictable energy costs, and scarce raw materials drive up costs.

In addition, the rapid rate of introduction of new information technologies – such as cloud, mobile, big data/analytics, IoT, and 3D visualisation – promises to enable dramatic, yet difficult-to-discern disruptions to the business processes, value networks, and people of industrial companies.

While the 20th Century mantra was "It's risky to go too fast with technology," the new reality dictates that, "It's risky to go too slow with technology." Of course, this does not apply immediately and equally across all industries and all industrial companies.

But the trend is clear. It's equally clear that all manufacturers should, at minimum, review and evaluate their technology adoption strategies to ensure that they are appropriate at this point in time, and for the foreseeable future.

Information-driven manufacturers utilise core solutions extensively. They actively seek opportunities to leverage disruptive technologies to their competitive advantage. Information-driven manufacturers have a bias toward using the latest technology and implementing the latest software updates and therefore they tend to avoid building their own custom systems.

Instead, they work in close partnership with core solution providers, tend to use much of the latest available technology from those providers, and actively drive the providers to introduce new technologies to solve specific problems.

[Greg Gorbach (ggorbach@arcweb.com) is VP, ARC Advisory Group.] 

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